4:00PM July retail sales rose but market worried rising interest rates.

-Yield on 10-year bond closed at 4.967% and 30-year closed at 5.095%.
-Crude oil rose 40 cents to close at $74.40 per barrel.
-Gold closed down $1.60, after trading in $26 range to close at $638.10 per ounce.

-Asian Markets closed higher led by 1.5% rise in Thailand, 1.25% gain in Indonesia and 0.4% gain in India. South Korea fell 0.95% and Japan declined 0.4%.

-European Markets closed mostly unchanged with France and the Netherlands closing higher and Germany and Spain closing lower.

-In Latin American Markets Brazil and Argentina declined 1% but Mexico gained 1% at close.

Rise in July retail sales of 1.4% and ahead of inflation data next week, market averages traded lower in the afternoon. Traders continued to bet on odds of rising interest rates in the coming months with stronger than expected rise in retail sales. Consumers continued to buy expensive gasoline, discounted cars led the rise with 3.5% gain and expensive gasoline sales advanced 2.5% in the month. Outside the auto sector sales in all other categories rose 0.1%.

In a rapidly consolidating mining industry, Brazilian iron ore giant CVRD offered C$86 cash offer for the shares of Canadian nickel miner Inco Ltd. Of the other five bidders, the cash and stock offer from Teck Cominco Inc. of C$86 appears to be favored by the Inco share holders. CVRD, the Brazilian mining giant, has the financial wherewithal to pull the cash offer. The company is valued at $53 billion and has less than $5.1 billion in debt on its balance sheet. Recently Swiss mining giant Xastra won the three-way battle to gain a control of Canadian miner Falconbridge Ltd for C$ 23 billion.

In Asian news, Japan reported a decline in economic growth in the second quarter to an annualized rate of 0.8% from revised rate of 2.7% (from 3.1%) in the first quarter. The decline in economic activity was the result of faster rise in imports compared to exports in the period and slower government spending. Import in the period rose 1.8% and export rose 0.9% from the previous quarter. Central Bank in Japan also kept the overnight lending rate at 0.25% on Friday. Market had expected the bank not to raise the rate. The Central Bank has communicated to the market that the future interest rates hikes will occur at a gradual pace.

In South Korea Central Bank raised its target for call rate by 0.25% to 4.5%, the fifth rise in interest rate since last October in increments of 0.25%. The Central Bank Governor also hinted that the Bank is ready to stop its pre-emptive target in rate hikes if the economy continues to slow. Inflation in July rose at 2.3% from a year ago, well in the rage targeted by the Bank of 2.5% and 3.5%.

12:30PM European markets closed largely lower.
European markets finished largely in the negative, dragged by U.S. market losses and further weakness in the telecommunications sector. Telecoms declined for a second day in a row on fears that operators may have to cut prices and brokerage downgrades in the sector. Deutsche Telekom dropped 3%, Vodafone Group lost 1.8% and BT Group lost 0.3%. Airlines and travel companies managed to recover from the steep losses posted Thursday, with Deutsche Lufthansa up 0.5% and Air France-KLM also up 0.5%. Companies in France gained on strong second-quarter GDP figures. Bank BNP Paribas climbed 1% and retailer Carrefour added 0.7%. The German DAX 30 lost 0.1%, London FTSE 100 fell 0.1%, while the French CAC 40 gained 0.2%.


Oil prices rose, recovering from over $2-dollar slump on Thursday. Light crude September delivery gained 42 cents to $74.42 a barrel. London Brent rose 55 cents to $75.83. The dollar traded mixed versus major currencies. The euro traded at $1.2754, down from $1.2784. The dollar bought 115.96 yen, up from 115.27. The British pound stood at $1.8946, up from $1.8922. European gold prices were mixed. In London the precious metal traded at $637.60, down from $640.70 per ounce. In Zurich gold traded at $640.63, up from $639.98. Silver closed at $12.17, up from $12.15.


11:30AM Apple and economic slowdown worries weighed.
U.S. stocks traded in the negative, with investors shifting their focus away from a terror scare to economic slowdown. Strong July retail sales prompted the slowing will be not extreme, while an unexpectedly strong increase in business inventories suggested just the opposite. All sectors posted weakness except for consumer discretionary stocks, which were flat, reflecting the better-than-expected retail sales numbers. Apple Computer (AAPL: chart) also weighed on sentiment on news it would delay its Q3 report because of irregularities related to past stock-option grants. In merger deals, Canadian Resort operator Intrawest Corp. agreed to be acquired by Fortress Investment Group LLC in a deal worth about $2.8 billion, or $35 a share including debt assumption. The offer represents a 32% premium to the stock's closing price of $26.51 on Thursday. Company’s shares soared 29%. In midmorning trading, the Dow Jones industrial average fell 28.02, or 0.05%. The Standard & Poor's 500 index fell 3.73, or 0.29%, and the Nasdaq composite index fell 8.13, or 0.39%. Bonds fell, with the yield on the 10-year Treasury note at 4.96%, up from 4.93% Thursday.


10:30AM The Indian Sensex ends in the green in a volatile trading.
The Sensex in India moved up 43.29 points, 0.39%, to close at 11,192.46. The turnover on BSE was Rs 3,382 crore, higher than Thursday’s Rs 3,138 crore. The Sensex moved in a range of about 385 points between some vital intra-day tops and bottoms of the day. The market-breadth wa strong as 1,694 shares gained, 764 declined and just 68 shares were unchanged. Among the Sensex constituents, there were 17 advances to 13 declines.

Reliance Industries gained 3% to Rs 1,009.80. Reliance’s bid for the retail cooperative, Super Bazar, which has several shops in and around Delhi, was well above Rs 70 crore offered by Indian Labour Cooperative Society along with Indian Potash. IT large-cap Infosys gained 2% to Rs 1,742.90.

The top market gainer has been Hero Honda, though, gaining 3.58% to Rs 698.00. Other advancers included NTPC, which rose 2.72% to Rs 124.70. Cement shares were in focus on hopes of strong product prices in the medium term. Grasim rose 2.2% to Rs 2,197.70, UltraTech Cement gained 1.8% to Rs 751, and ACC rose 0.6% to Rs 880.90. Steel large-cap Tata Steel also rose 2.2% to Rs 527.80 and Steel Authority of India advanced 1.9% to Rs 77.80.

Some auto shares gained after a fall in oil price. TVS Motor added 3.3% to Rs 93, Eicher Motor rose 1.7% to Rs 224.50, Bajaj Auto notched up 1% to Rs 2,657.80, and Tata Motors advanced 0.6% to Rs 794. Great Eastern Shipping surged 6.5% to Rs 255.35. The company stated on Thursday that its board decided to petition the Bombay High Court, seeking an extension of deadline, which lapsed on 2 August, to demerge its offshore business.

Banking shares dipped on profit-taking occured. ICICI Bank moved back nearly 3% to Rs 582.50 and State Bank of India lost 0.6% to Rs 855.50. Power equipment makers edged higher. Siemens soared nearly 8% to Rs 1,009, Kalpataru Power jumped 7% to Rs 792, KEC International gained 4.8% to Rs 266.50, ABB rose 3% to Rs 2,774.85, Suzlon Energy advanced 1.8% to Rs 1,227 and Crompton Greaves added 1.1% to Rs 221.

Among other stocks, Thomas Cook India jumped 10% to Rs 577 after the travel services firm unveiled an 11-for-20 share-swap ratio for merging operations of moneychanger, LKP Forex, on Thursday and also announced a plan to buy Thomas Cook Thailand for 2.5 million euros. Gitanjali Gems surged 5% to Rs 148.70 as a few block deals were executed in the stock on BSE at Rs 145.20-Rs 147.75 per share. Volumes were a huge 43.4 lakh shares on BSE.